Trading In The Persian Bazaar - Beijing and Moscow's Iran Policy: Part I

Discussion in 'Iran' started by The BKP, Aug 7, 2009.

  1. The BKP

    The BKP Grand Inquistor

    Jul 15, 2008
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    After Pyongyang's most recent nuclear test and the repeated provocations of it's numerous missile launches, we looked at the underlying issues behind China's reluctance to aggressively sanction their maddening neighbors in the Hermit Kingdom. Now with hardline President Mahmoud Ahmedinejad having been sworn in for a second term, many wonder if the United States and Iran will ever enter into serious dialogue over Tehran's burgeoning nuclear programs. Looking far afield for any potential leverage against Iran, not only does China once again come into play, but Russia enters America's strategic calculus as well. That being the case, the question is - what are the prospects - or lack thereof - for assistance with this sticky Persian wicket from our "dear friends" in Beijing and Moscow?

    First, we must recognize that many, including the Chinese themselves, see China as an ascendant power with an increasingly influential role in the international system. With the world's third largest economy, foreign currency and treasury bond reserves well north of a trillion dollars and double-digit annual economic growth and military spending increases, there is little doubt the Chinese dragon has woken from it's self-imposed slumber and is roaring with a pride and self confidence unparalleled in the modern era. Concurrent to Beijing's rise, Moscow seeks to reestablish Russia's position of prominence among the leading ranks of states. In doing so, it hopes to once again bask in the fear, respect and influence the Bear commanded in it's former glory days when it confidently confronted America and it's allies at the height of the bipolar Cold War.

    Though the dynamics of the international sphere are fluid, there is the fervent belief among many in the foreign policy intelligentsia in what can be referred to as the Spider Man axiom of international affairs- With great power comes great responsibility. In their minds, Beijing and Moscow have a responsibility as stakeholders and would-be leaders in the international system to assist in the maintenance of it's stability. Part and parcel of that entails working in concert with other leading powers to address threats to the system. Iran, the argument goes for varying reasons in both Liberal and Conservative circles, is just such a gathering threat.

    Nonetheless, this begs the question - Why is it in Beijing and Moscow's strategic interests to maintain the stability of an international order constructed by and favoring the United States and it's allies? The answer is simple - it is not.

    As is the case so often, one of the primary integers in China and Russia's strategic calculus in regards to Iran is economics. That being said, today we'll look at the economic factors underpinning their reluctance to take substantive action against the recalcitrant regime in Tehran.

    Let's begin with China. Beijing, ever taking the long view and mindful of the need to keep it's economic engine well-fueled, views the oil fields of the Middle East as critical to it's national security. As part of a broader global initiative that combines low interest loans, massive infrastructure investment, exclusive access agreements, partnerships with local firms and governments, outright purchases of foreign energy fields and political protection in the international arena and the United Nation's Security Council, China has signed long term development and exclusivity deals with Iran for both oil and natural gas. Beijing places access to reliable sources of energy and the societal stability and politically legitimacy of the Communist Party that is directly linked to a growing economy ahead of America's desire to restrain a rising and potentially nuclear-armed Iran.

    In addition to energy, arms also trade hands between China and Iran. For example, the Iranian side of the Persian Gulf is dotted with Chinese-manufactured sea-skimming Silkworm anti-ship missile batteries. In the event hostilities would occur between the US and Iran, odds are the Iranians would launch an aggressive anti-access/area denial offensive that incorporated Silkworm missile follies designed to overcome American close-in naval defenses. The objective would be to drive the Sixth Fleet from the Gulf, thereby limiting it's operational effectiveness and lethality. Should the tactic prove successful, China would reap the windfall profits of both Iranian resupply orders as well as purchases from other states seeking to keep the American navy at arm's length.

    Furthermore, the trump card of Chinese held American securities, treasury bonds and currency reserves provides a greater sense of maneuverability and independence of action for Beijing. Accordingly, the Obama administration must be mindful that should it press it's counterparts in the Middle Kingdom too forcefully it places the stability and value of the dollar in jeopardy.

    While many rightfully point out that dumping dollars would result in serious self-inflicted wounds for China, the Administration would be well-advised not to take solace in this thought. Given the proverbial alignment of the geopolitical stars with the corresponding concert of the right set of circumstances at the right time, Beijing may well calculate that the pain is worth the long term benefit of toppling the United States from it's lofty perch atop the international system. Though China may willfully cast itself into the heart of the maelstrom, the rationale would be the end of America's preeminence and the inauguration of an era of true multipolarity. Such an event would open the door for China to challenge for the role of regional hegemon, not an unappealing prospect for a nation that believes it fails to receive the respect, deference and influence it is due as one of the world's oldest cultures and civilizations.

    Russia, like China, is also a supplier of arms to Iran. From T-72 tanks to MIG-29 fighters, Moscow has sold billions of dollars and hundreds of weapons systems to Tehran over the past two decades. A point of contention between the Pentagon and the Kremlin and of particular concern to both American and Israeli Air Force planners is Russia's agreement to provide Iran with the advanced TOR M-1 air defense missile system. Ostensibly reported to supplement air defense of the Russian-built nuclear reactor at Bushehr, the purchase is a $700 million deal. Accordingly, it is in Russia's economic interests to allow tensions between Washington and Tehran to remain unresolved - tension generates fear, fear spurs arms sales.

    As noted previously, Russia has built the nuclear reactor at Bushehr. Seeking to sweeten the pot and retain Moscow's protection in the UN Security Council, Tehran has suggested Bushehr could be the first of up to two dozen potential Russian-built reactors in Iran. Contracts for such an ambitious program would run in the hundreds of billions of dollars and span decades. Needless to say, by comparison, the prospects for similarly profitable opportunities in the US are exceedingly slim.

    Finally, there is the issue of natural gas. Seeking significantly enhanced influence over global markets, Moscow has proposed the creation of a producer's group similar to that of OPEC. The foundation of that group would be Russia, Iran and Qatar, who collectively control roughly 55 percent of the world's proven natural gas reserves. That being said, one can hardly expect Moscow to countenance the sanctioning of a crucial partner in what it perceives to be in it's long term economic interest.

    While Americans may disparage Beijing and Moscow for cynically placing their own economic interests ahead of global security and stability, one should remain mindful of the fact that the European Union, and the Germans in particular, have similarly been loath to aggressively sanction Tehran for fear of losing lucrative contracts worth billions of Euros. Accordingly, serious observers should be neither shocked or offended when the Chinese and Russians laugh off what might otherwise be biting condemnations were it not for the actions of some of America's closest allies.

    Penny for your thoughts, faithful readers? Or perhaps your security?

    Stay tuned for further updates as events warrant and tune in Monday for a look at the strategic and geopolitical forces behind Beijing and Moscow's rebuffing of Washington's entreaties for assistance with Tehran.

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